InvestorQ : What is this Rs2,000 crore that Byju’s needs to pay to Blackstone shortly and is it really a major challenge?
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What is this Rs2,000 crore that Byju’s needs to pay to Blackstone shortly and is it really a major challenge?

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3 weeks ago
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These are not great times for Edtechs and Byju’s appears to be under pressure from multiple points. Just a week after the Ministry of Corporate Affairs (MCA) pulled up Byju’s for the delay in announcing its FY21 results, the actual numbers itself was a disaster. In the latest salvo, Byju’s has less than 7 days to pay up Rs2,000 crore to Blackstone as the last tranche of payment to be done towards the purchase of Aakash Education Society. Byju’s had bought a majority stake in Aakash Education from Blackstone for $950 million.

Now comes the more interesting part. The entire sum of Rs2,000 crore was supposed to be paid in June 2022, but due to the funding constraints it had been put off by 3 months till 23rd September. This is the date on which the maximum RBI allowed period of 18 months of pay-outs for equity transactions actually expires. Any delay beyond this date would need RBI approval. Post the closure of the deal, Blackstone and Aakash Founders will be holding a minority stake in Byju’s as part of the stock swap. Blackstone will hike its stake to 1.2%.

Here is where the problem is coming. Large investors who committed to invest in Byju’s had either backed out or had not brought in the funds. Sumeru Capital is yet to bring in the funds committed. The latest loss of Rs4,588 crore will put further pressure on valuations. Apparently, Byju’s is in advanced talks to raise $500 million in the market and the deal is almost through. However, in this business, and especially in these kind of uncertain business conditions, there is many a slip between the cup and the lip.

For Byju’s time is running out and it needs to bank roll the Rs2,000 crore in 1 week, which looks tough without the $500 million coming in quickly. Blackstone will double its investment in Aakash in 3 years, but Byju’s may have gone overboard in its inorganic enthusiasm.

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